Transportation Investments in India and Vietnam
The Climate Innovation and Development Fund (CIDF), which is supported by philanthropic capital from Bloomberg Philanthropies and Goldman Sachs, announced the completion of its first set of blended finance investments, focusing on innovative electric mass mobility solutions in India and Vietnam, such as electric buses and charging infrastructure.
Launched last year, CIDF aims to assist sustainable low-carbon economic development in poor countries in South and Southeast Asia by providing grants to high-impact initiatives with direct and verifiable positive climate-related effects, including climate mitigation and adaptation. Among the targeted innovation areas are renewable power production, sustainable transportation, climate-smart urban solutions, grid optimization technologies, agriculture and land use, and green manufacturing and construction. Asian Development Bank administers the money (ADB).
The founder of Bloomberg LP and Bloomberg Philanthropies, Michael R. Bloomberg, stated:
"Switching to clean power and electric transportation can provide great benefits to poor nations, but initial costs are sometimes an impediment. This program brings individuals together to mobilize finance and launch other initiatives to reduce emissions, promote public health, stimulate economic growth, and generate jobs."
Blended finance combines public or charitable funds with private funding through a similar investment framework, allowing investors to invest in specific types of investments with perceived high-risk profiles, such as innovative technology for climate mitigation. The instruments are intended to attract large-scale institutional capital, allowing public financiers and other donors to utilize a little number of their own resources as a first loss in order to mobilise a substantial quantity of private capital to reach a big number of underlying climate initiatives.
The fund was created with $25 million in grant pledges from Bloomberg Philanthropies and Goldman Sachs and hopes to leverage up to $500 million in additional investment for innovation in the private sector.
David Solomon, Chairman and Chief Executive Officer of Goldman Sachs, stated:
"Innovative solutions, such as blended-finance facilities, can generate the necessary money to enhance sustainability. The Climate Innovation and Development Fund will speed the decarbonization of mass transportation in India and Southeast Asia and advance the climate transition by encouraging more private financing to support projects like these.
The investment announced by CIDF in India will support the GreenCell project's acquisition of electric buses to replace diesel buses operating on 56 high-traffic intercity routes in multiple cities, as well as charging infrastructure comprising solar-plus-battery solutions at bus depots. The buses are predicted to service five million passengers per year, and the project is anticipated to cut CO2 emissions by roughly 15,000 tonnes per year. Goldman Sachs estimates that the fund's investment will mobilize nearly 14 times its initial investment amount.
The investment will support the Vinfast project in Vietnam, which will develop the country's first electric bus fleet for public transport and the first national electric vehicle charging network, including the construction of up to 140 electric buses and 150,000 charge points at thousands of stations.
ADB President Masatsugu Asakawa, said:
"Mobilizing capital on a massive scale is essential in the fight against climate change, particularly in Asia and the Pacific, where this global struggle will be won or lost. By supporting significant new initiatives such as the Climate Innovation and Development Fund, partners such as Bloomberg Philanthropies and Goldman Sachs can help mobilize the private sector capital required for transformative projects that can put the region on the path to low-carbon economic growth."